Financing of Health S&T

 

 

Parvathi K. Iyer & Dinesh Abrol

 

India has continually articulated its commitment to universal health care for all its citizens through the conceptualization of several programmes and schemes since the dawn of Independence. In this context, it becomes essential to undertake an assessment of the available resources through which the state has attempted to mould these policies and schemes into universal health outcomes in order to understand the fit between the stated objectives and prioritization of these resources. This section specifically attempts to provide an insight into such prioritization of resources in terms of outlining some broad trends in the financing of Health S&T schemes. The schematic outline of the section is as follows. At the outset, the section provides an account of the organizational structure of health systems in India and some general trends in relation to health expenditure in India. Subsequently it provides a framework for capturing Health S&T financing trends in terms of Key actors (principal sources and users of funds), objectives of these Actors and some analysis pertaining to impact assessment. The discussion of these trends, however, essentially focuses on the dimensions of health R&D, education and training and health services, with particular emphasis on Central government funding sources including programmes and schemes for medical education, research, training and services, State government funding sources including programmes and schemes for services and funding patterns of medical research by Departments located under different ministries in the government. The section also discusses some broad findings in relation to the afore-mentioned dimensions. The section, in a nutshell, examines the broad status of health financing in India in addition to outlining some suitable measures to realize the goal of affordable health for the Indian population.

 

Organizational Structure of Health Systems in India

Health S&T schemes are implemented by the state under the aegis of the Health Ministry. Within the ministry, there is a bifurcation in terms of the Secretariat (Health Services) and the Technical Wing (Directorate of Health Services). At the level of the Central government, there are four departments: Department of Health, Department of Family Welfare, Department of Indian Systems of Medicine and the Directorate General of Health Services. The Directorate General provides technical support for the various health programmes. Within each department, there are functionaries such as Secretary, Joint Secretaries, Deputy Secretaries and Under-Secretaries to oversee different programmes in the department. In the case of certain programmes, in addition to the above-mentioned functionaries, there are directors, advisors, commissioners and their deputies to supervise these schemes and programmes. The same administrative structure is replicated at the state level to a large extent. The interaction between the Central and State machineries for Health is facilitated through the Central Council of Health and Family Welfare. This council also fulfils advisory and policy level functions in the context of health care in the country. In addition, the Planning Commission of India has a health cell which supports the above mentioned council and provides crucial inputs towards health care efforts.

 

Some general trends in health expenditure in India

In this sub-section, we provide a glimpse of some measured levels of expenditure on health in India with respect to a few significant indicators.

 

Table 1: Some measured levels of expenditure on health in India (1997-2003)

 

Source: World Health Report 2006, National Health Accounts 2007, (latest available figures)

 

The above-mentioned indicators provide a significant pointer to the patterns of investments, expenditure, sources of funding and proportion of allocation for health schemes and programmes in relation to the total allocation. These indicators also provide an understanding of health outcomes in relation to the expenditure. Investment on health, family welfare & AYUSH for the Tenth plan (2002-07) was Rs.31,020.3, Rs.27,125 & Rs.775 crore respectively while total budgetary allocation under health sector was Rs.21,767.34 crore. The government expenditure on health as a percentage of total expenditure on health was 24.8% while that of the private sector was 75.2%. Public spending on health increased from 0.22% of GDP in 1950-51 to 1.05% of GDP during the mid-eighties and stagnated around 0.9% of the GDP during the later years.

 

Burden of Disease and Projected Deaths in India 2010:

The examination of health care financial flows becomes crucial in the context of the need to take measures to control the rising burden of communicable diseases, the rising threat of non-communicable diseases, the looming risk of HIV/AIDS infection and consequently the need to channel health research efforts and optimize appropriate utilization of health related expenditure in accordance with these changing epidemiological patterns.

 

Fig 1: Projected deaths in India 2010

Source: ICMR Tenth Plan documents

 

Figure 1, clearly indicates the rising burden of non-communicable diseases (61%) by the year 2010. The data however does not refer to the percentage of projected deaths due to HIV/AIDS infection.

 

Share in Expenditure on Health Care:

Also, in terms of the sources and determinants of healthcare financing, the burden of healthcare expenditure in India largely falls on individual households, indicating relatively less involvement and inadequate support structures generated by the government in this regard.

 

Fig 2: Share in health care spending among the different sectors

Source: National Health Accounts 2007, MoHFW

 

Understanding the Framework of Health Financing in India:

 

Table 2: Key Agencies (Sources & Users/Performers) in Health Financing in India

 

Sources

Users

Public Sector

Central sector budget

State sector budget 

Departments/Agencies of different ministries

Ministry of Health (State and Central health sector)

Academic research institutions

 

Private Sector

Foundations

Bilateral/Multilateral Agencies

Pharmaceutical Firms

NGOs

 

 

Public Health Expenditure

The link between equitable access to health care and better outcome indicators and increased involvement of the State in health financing related activities is well disseminated. The following tables and diagrams provide us with an understanding of Central sector and State sector allocations and details of expenditures on health education, training, research and services and provide us with a bird’s eye- view on trends in public expenditure on health care in India. These tables also capture the spatial distribution and flow of healthcare related expenditure.

Central Sector: This section attempts to capture the different schemes and programmes under the Central sector budget. The Central sector largely takes care of some curative, preventive and immunization programmes and medical research, education and training.

 

Table 3: Pattern of Allocation (All sectors including Health) for the country during the different plan periods

NOTE: Department of Ayush was created in the Eighth Plan period. Figures in Plan indicate percentage to total plan investment outlay.

Source: NHA 2007

 

Table 3, utilizing data from the National Health Accounts, 2007 clearly indicates a gradual and steady increase in the proportion of allocation of funds for the health sector during the different plan periods.

 

Table 4: Approved Outlay and Actual Expenditure for Centrally sponsored health schemes in X Plan period

Source: Ministry of Health & Family Welfare

 

Table 4, outlines the scheme-wise plan outlay and expenditure for Health during the Tenth Plan period. During the Tenth Plan, the Central Schemes of Control/ Containment of non-communicable diseases such as for Cancer and Mental Health have been converted to centrally sponsored schemes. The table clearly highlights the greater emphasis given to vertical programmes.

Health R&D, Medical education and Training (Central Sector): In India, the R&D investment in health is about 2% of the total health budget. However, for this investment to become meaningful, the trend of under-investing in health care must cease. The proportion of R&D allocations for health in the country is about 2% of the R&D efforts in all other sectors. In the current context, the epidemiological transition in terms of the continuing dominance of infectious diseases and the rising burden of non-communicable diseases has necessitated an increasing emphasis on a focused research strategy to combat challenges in infectious diseases, non-communicable diseases, nutrition and reproductive health. The instituting of the Department of Health Research under the Ministry of Health recently is a step in this direction.

 

Fig 3: Medical research, training and education expenditure as a proportion of total health expenditure (in crores)

Source: Ministry of Health and Family Welfare reports

 

Funding by departments of different ministries: The departments under different ministries in the government of India, particularly the Ministry of Science and Technology do not engage in research within their departments. Some departments, particularly the NSTMIS division of the Department of Science and Technology, however, periodically come out with reports mapping the quantum and nature of scientific efforts in different fields. The principal task of these departments is to fund research projects in both academic and industrial organizations. Such kinds of research and development efforts are referred to as extramural research and development.

With respect to funding patterns of extramural research and development projects by agencies like Department of Science and Technology, Department of Biotechnology, Council of Scientific and Industrial Research, Indian Council of Medical Research etc , available statistics reveal a significant increase in percentage of funding for medical research during the Tenth Plan period, especially in comparison with other areas like engineering and technology, agriculture sciences, biological sciences, chemical sciences, earth sciences, mathematics and physical sciences.

 

Fig 4: Area-wise distribution of extra-mural R&D projects

Source: Department of Science and Technology reports 2007

 

The development and commercialization of new technologies, particularly through public-private partnerships is assuming greater significance in the context of the new patent regime. The figures provided by the Technology Development Board of the Department of Science and Technology reveal that a significant share of these agreements pertain to the stream of medical research.

 

Table 5: Sector wise agreements by Technology Development Board, Department of Science and Technology with public and private R&D institutions on development and commercialization of new technologies

S. No.

Sector

No. of Agreements

Total Cost

(Rs. crores)

Sanctioned by the Board

(Rs. crores)

1.

Health and Medicine

37

497.18

151.29

2.

Engineering

32

275.10

86.14

3.

Road Transport

10

527.04

81.20

4.

Air Transport

2

142.10

68.20

5.

Energy & waste Utilisation

6

98.34

43.98

6.

Chemicals

16

112.89

36.18

7.

Agriculture

15

77.98

24.52

8.

Telecommunications

5

35.98

11.86

9.

Information Technology

14

68.45

29.07

10.

Technology Transfer Centres

1

0.83

0.50

11.

Other Agencies

3

208.00

130.00

 

Total

141

2043.89

662.94

Source: TDB reports 2005

 

Table 5, is significant in terms of highlighting the proportion of funds allocated by the Technology Development Board of the Department of Science and Technology(DST) for development and commercialization of new technologies in health and medical research in comparison to allocations for R&D in Engineering, Road Transport, Air Transport, Energy and Waste Utilization, Chemicals, Agriculture, Telecommunications, Information Technology, Technology Transfer Centres and Other sectors. The agreements have been signed with both public and private R&D institutions.

In this connection, it would also be pertinent to take note of the funds allocated to the ICMR, the principal agency for conducting and promoting biomedical research in India, in promoting health research based activities during the different plan periods. Since the sixth plan, there has been a progressive growth in funding for science and technology related activities in a wide range of disciplines. However, outlays for ICMR during the different plan periods have been nominal compared to outlays for other Science and Technology agencies like ICAR, CSIR and DBT. Again, the examination of the plan outlays for ICMR and actual expenditure shows a trend of enhanced capacity for utilizing the funds.

 

Fig 5: Plan outlay and actual expenditure of ICMR

 

Fig 6: Percentage break-up of ICMR allocations for the year 2005-06

Source: Extra-mural R&D Funding database (DST)

 

Also significant in the current context is an estimation of sector-wise funding patterns of health research related projects. Available statistics clearly indicate the dominant role of the private sector in funding health research in India.

 

Table 6: Expenditure on R&D efforts in health services sector-wise (Rs. in lakhs)

Sector

Year

2000-01

2001-02

2002-03

Central Government

39,548.11

41,724.24

43,642.42

State Government

3,364.89

3,193.92

3,266.72

Public Sector

951.31

981.80

1,034.98

Private Sector

85,924.01

96,780.76

107,231.60

Total

129,788.32

142,680.72

155,175.72

Source: Planning Commission report (2005)

 

Fig 7: Sector-wise Funding funding of health related research projects by Sector (in lakhs)

Source: Department of Science and Technology

 

State Sector: Expenditure in the State sector allocations for health schemes and programmes is essentially related to services. The instituting of the National Rural Health Mission is a crucial development in this regard.

Health related services: The government of India had launched the National Rural Health Mission (NRHM) in 2005 in order to carry out some essential architectural corrections in basic health care delivery systems. One of the significant aspects of this effort to revamp the health systems includes an increased commitment to increase expenditure on health related services. As far as the services sector is concerned, the proportion of expenditure by the state governments (85%) far exceeds Central government allocation on health services (15%).

 

Fig 8: Per capita budget for National Rural Health Mission Programmes for the year 2006-07 (in Rupees)

Source: NSSO 60th round, Chakraborthy & Nair 2008

 

Figure 8, shows the per capita budget for the National Rural Health Management Programmes for the year 2006-07. The per capita NRHM budgets for the states of Arunachal Pradesh and Mizoram are among the highest while for the states of Bihar, Goa, Kerala, Karnataka, Tamil Nadu and West Bengal, it is among the lowest.

The NRHM has envisaged an additional 30% over existing annual budgetary outlays every year, to fulfil the mandate to raise the outlays for public health from 0.9% of GDP to 2.3% of GDP.

 

Fig 9: Bar diagram depicting per capita health budget for the year 2006-07 (in Rupees)

Source: NSSO 60th round, Chakraborthy & Nair (2008)

 

Figure 9, shows the per capita health budget figures (in Rs.) for the year 2006-07. The charIt shows high per capita figures for the states of Goa, Sikkim, Mizoram and Arunachal Pradesh for this period while states like Bihar, Gujarat, Madhya Pradesh, Orissa and West Bengal have the lowest per capita figures in comparison to the other states.

 

Fig 10: Bar diagram depicting health budget as percentage of total budget for the year 2006-07

Source: NSSO 60th round, Chakraborthy & Nair (2008)

 

Figure 10, represents allocations for the health budget as a percentage of the total budget for the year 2006-07. Budget allocations for the state of Assam are the highest while the lowest allocations are for Goa, Haryana and Sikkim in comparison to other states. The spatial patterns of these budget allocations also signify expenditure on services rather than health research as the main determinant. For instance, states like Assam, Tripura, Meghalaya, Mizoram etc, which have been allocated a significant percentage of budgetary resources for health, do not have too many health research related S&T institutions.

 

Fig 11: Medical and Public Health Expenditure as % of Total Health Budget for the states and Union Territories for the year 2006-07

 

Figure 11, indicates a significant percentage of medical and public health expenditure as percentage of total health budget for states and union territories. It may be noted that in certain states a major chunk of the state budgetary allocations goes into maintenance of infrastructure and payment of salaries, with very little funding left for purchase of medicines or non-routine health related services.

 

Future Initiatives

 

 

References:

     

 

 

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